Disclaimer: Until in any other case said, any opinions expressed beneath belong solely to the writer.
For the previous few years, my commentary on regional ecommerce has revolved across the competitors between Shopee and Lazada. The formidable upstart from Singapore ended up pushing out the previous market chief, although it acquired backing from Chinese language Alibaba.
And simply when it appeared that the warfare was settled, that Shopee would reign over Southeast Asia with its rivals scrambling for the breadcrumbs it left behind, TikTok—of all of the manufacturers—has determined to enter the fray as effectively.
However what does a social media firm find out about working a web-based retailer? How can or not it’s a match for business veterans?
Nicely, one factor it does know is that these veterans need to pay for entry to eyeballs that it owns. And if that’s the case, then why not promote to them immediately?
Location, location, location
No one can promote something if individuals don’t find out about it. You need to make your self identified or, higher nonetheless, place your online business the place the individuals already are. That’s the supply of the well-known rule of actual property—location trumps the whole lot else.
Nevertheless it works within the digital world as effectively. It doesn’t matter how enticing your supply is, or how strong or low-cost your product choice is, if no person is conscious of your existence.
And so, main ecommerce corporations have needed to first spend billions of {dollars} to place themselves in entrance of potential shoppers—and now proceed spending extra to maintain them coming again.
What’s extra, dimension and model consciousness isn’t any assure of tolerating success, because the case of Lazada proves.
Nonetheless, even its profitable challenger, Shopee, nonetheless operated inside the identical guidelines. However what if the subsequent competitor injects himself earlier than clients can ever see you?
That’s what TikTok is making an attempt to do. It is sort of a landlord who used to lease house for different corporations, solely to now reserve half of it for himself and compete with them as a substitute.
This can be a catch-22 state of affairs for the incumbents. On one hand, they’re successfully paying a direct competitor for entry to the identical viewers that TikTok can attain freely via its personal platform. On the opposite, they can’t merely stroll away, as a result of TikTok stays a gateway to tens of millions of potential clients.
In the meantime, TikTok advantages from either side of the equation. It earns income from promoting whereas additionally producing revenue from direct gross sales to shoppers.
Given its speedy progress, the technique seems to be paying off. Together with Tokopedia, which TikTok took management of in 2024, the corporate now instructions near 30% of Southeast Asia’s e-commerce market. Shopee nonetheless leads with a 52% share, however the query is whether or not it could preserve that dominance.
Monetising boredom
Within the consumerist world we’re dwelling in, many purchases are made on impulse. You see one thing cool, enjoyable, fashionable, and also you need it.
Over the previous few years, quick, catchy, viral movies have change into some of the highly effective instruments for creating demand. Historically, nonetheless, appearing on that impulse required an additional step: clicking a hyperlink or trying to find the product on a market resembling Shopee.
The truth is, most conventional e-commerce platforms are constructed round intent. Customers usually go to them with a particular aim in thoughts, whether or not it’s trying to find a product, evaluating costs, or making a purchase order they’ve already selected.
TikTok Store works otherwise. It creates the need earlier than the search occurs.
A creator exams a product. A livestream host demonstrates it. A brief video exhibits a before-and-after consequence. A reduction seems whereas the viewer continues to be watching. The acquisition button is just not positioned after a search question, however inside a second of consideration.
That may be a drawback for Shopee and Lazada as a result of search-based marketplaces are inclined to reward scale, logistics and worth. TikTok rewards consideration, storytelling and impulse.
A vendor doesn’t essentially want the very best product itemizing. He wants a video that converts—and it converts inside TikTok Store, simply moments after purchaser curiosity has been piqued.
Tens of millions of individuals swiping via quick clips are repeatedly uncovered to new merchandise, which they will now purchase proper then and there. The entire ecommerce expertise of going to a third-party app or web site and finishing your checkout there has simply been truncated into a number of faucets within the midst of your social scrolling session.
In different phrases, TikTok’s method to ecommerce is just not solely fulfilling the demand however creating it too, and monetising it earlier than competitors ever has an opportunity.
That is the place it will get actually harmful for current ecommerce platforms.
Whereas there are particular needed items that we’re shopping for regularly, which individuals could habitually go to Shopee, Amazon or Lazada for, shopper demand must be repeatedly refreshed with one thing new.
And all of these new merchandise are launched via varied types of content material. Today, it’s principally video—the medium that TikTok dominates over, particularly in Southeast Asia.
So, not solely does it personal the primary communications channel, but it surely will get to create new developments earlier than rivals are even conscious of them.
Can it change large on-line marketplaces completely? Probably not. However it could monopolise entry to the newest, most tasty merchandise and even create a lot of them itself, somewhat bit like Shein does via its tight integration with Chinese language producers.
If it continues its profitable run, it might redefine ecommerce endlessly and encourage different social media giants to comply with swimsuit.
Learn different articles we’ve written on tech giants right here.
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